NEW YORK ENERGY HIGHWAY

Transcription

1 RESPONSE TO REQUEST FOR INFORMATION NEW YORK ENERGY HIGHWAY May 30, 2012 West Point Partners, LLC c/o PowerBridge, LLC 501 Kings Highway, Suite 300 Fairfield, CT Phone Fax

2 RESPONSE TO REQUEST FOR INFORMATION New York Energy Highway Contents Section Title Page SUMMARY OF RESPONSE TO REQUEST FOR INFORMATION 1 I. RESPONDENT INFORMATION 2 A. Contact Information B. Respondent s Background and Experience II. PROJECT DESCRIPTION 4 III. PROJECT JUSTIFICATION 6 IV. FINANCIAL 9 A. Private-Public Partnership B. Financial Structure and Funding Options V. PERMIT/APPROVAL PROCESS 12 A. Federal, State, and Local Permits B. Permit and Approval Status C. Permitting Considerations VI. ADDITIONAL INFORMATION 13 A. Property B. Project In-Service Date and Project Schedule C. Interconnection D. Technical E. Construction F. Operational G. Socio-Economic H. Financial I. Environmental J. Project Contract/RFP Status K. Public Outreach and Stakeholder Engagement Appendices A. West Point Partners Key Personnel B. Technical Information, Siemens VSC-HVDC System C. Technical Information, Prysmian HVDC Cables

3 SUMMARY OF RESPONSE TO REQUEST FOR INFORMATION New York Energy Highway West Point Transmission ( West Point ) is conceived as an essential component of New York s proposed Energy Highway -- an underwater electric transmission cable capable of linking at least 1000 MW of less expensive and more environmentally sensitive generating resources from northern and western New York with electricity consumers in the New York City metropolitan area. As shown in red on the map below, West Point starts south of Albany and ends in Buchanan, New York. In combination with other important transmission system upgrades in the New York system, it will provide a new, broader pathway for cleaner and more diverse power into the downstate region, as well as multiple opportunities upstate for new jobs and economic development. PROJECT DESCRIPTION West Point Transmission will carry 1000 MW of electric capacity (expandable to 2000 MW). The transmission line will primarily be installed underneath the Hudson River, using established underwater installation techniques, taking care not to disturb sensitive river resources. The total route distance is approximately 80 miles. West Point will feature Voltage Sourced Converter-High Voltage Direct Current (VSC-HVDC) technology, characterized by controllability, compact design, and ease of interface with interconnecting systems. A converter station will be built at each end of the line, and interconnections to the NYISO system will be at the Leeds and Buchanan substations. West Point benefits and advantages for New York include: A new pathway for transmitting electricity from existing, repowered, and new generation sources in northern and western New York into the New York City electricity market. Broader access to renewable resources, including upstate wind and hydro power, boosting efforts to meet the state s Renewable Portfolio Standard and create a more diversified resource portfolio. New jobs in New York for project construction, as well as the potential for hundreds of additional jobs to build, repower and operate upstate generation needed to meet New York City electricity demand. Proven state-of-the art HVDC technology that enhances the stability of the transmission system in addition to increasing transmission capacity. Protection of natural resources along the Hudson River corridor. An experienced development team with a successful track record in building and operating similar facilities in New York: the Neptune and Hudson transmission projects. 1

4 I. RESPONDENT INFORMATION A. Contact Information Name: West Point Partners, LLC c/o PowerBridge, LLC Address: 501 Kings Highway East, Suite 300 Fairfield, CT (main telephone for all contacts) Primary Contact: Alternate Contact: Edward M. Stern, President and CEO Christopher Hocker, Vice President-Planning B. Respondent s Background and Experience West Point Partners, LLC ( WPP ) is a single-purpose entity formed by PowerBridge, LLC of Fairfield, CT and Anbaric, LLC of Wakefield, MA for purpose of developing, building, owning, and operating West Point Transmission, the proposed electric transmission cable project that is the subject of this RFI Response. PowerBridge, the Managing Partner of WPP, specializes in the development, permitting, financing, construction, ownership, and operation of energy and infrastructure projects ( Notable examples of PowerBridge projects include: Neptune Regional Transmission System: Neptune is a 660-MW, HVDC underground and underwater transmission cable that links PJM Interconnection with NYISO, serving the Long Island Power Authority ( LIPA ). It extends 65 miles between Sayreville, New Jersey and North Hempstead, Long Island, New York, and includes an HVDC converter station at both ends of the line. Neptune was completed in June 2007 after a two-year construction period, on budget and ahead of schedule, at a cost of approximately $650 million that was entirely financed in the private capital markets. For the past five years, it has provided approximately 20 percent of Long Island s electricity needs. ( Cable for the Neptune Regional Transmission System is installed from a barge in the Raritan River in New Jersey, September

5 Hudson Transmission: Hudson, like Neptune, is a 660-MW underground and underwater transmission connection between PJM and NYISO. It includes a back-to-back HVDC converter station in Ridgefield, New Jersey and a 345-kV AC transmission cable that runs approximately seven miles, including nearly four miles under the Hudson River, to the Con Edison W. 49 th Street substation. Construction began in May 2011, with underwater cables installed under the Hudson in December 2011, and the project be ready for its scheduled completion date of July Financing for the $850 million project was obtained from private investors, many of whom also participated in the Neptune project financing. ( Cable installation ship Giulio Verne bearing Hudson Transmission cable, in the Hudson River, December 2011 The core development team for WPP includes individuals who were and are directly involved in the development, permitting, financing, construction, and operation of the Neptune and Hudson projects. In addition, the West Point team includes Anbaric Transmission, a privately-held company specializing in the development of energy transmission and smart-grid projects, whose principal, Edward N. Krapels, is a founding partner of the Neptune and Hudson transmission projects; and equity investors, contractors, and consultants who participated in these projects. (See Appendix A for summary resumes of key personnel.) 3

6 II. PROJECT DESCRIPTION Type of Project: Size of Project: Location: Fuel Source: Transmission 1000 MW (can be increased to 2,000 MW) Leeds Substation (Athens, NY) to Buchanan Substation Not applicable Earliest Date of Operation: 2017 Project Technology: Voltage Source Conversion/High Voltage Direct Current The West Point Transmission facility ( West Point ) is conceived as an essential north-south element of New York s Energy Highway, capable of carrying 1000 MW of electric power for approximately 80 miles between the existing Leeds substation near Athens, New York, to the existing Buchanan substation adjacent to the Indian Point Energy Center. In combination with other transmission system upgrades to the north and west, West Point will be a major energy pathway that enables power to flow from a diverse array of generating resources throughout the state to load centers in the greater New York City area. West Point will include a high voltage (320-kV) cable buried underneath the Hudson River to the greatest extent practicable and will use Voltage Source Conversion-High Voltage Direct Current ( VSC- HVDC ) technology for controllability, voltage stability, and efficiency. A VSC-HVDC converter station will be constructed at each end of the line, close to each point of interconnection. For descriptive purposes, West Point is conceptually similar to the Trans Bay Cable Project, a 400-MW VSC-HVDC project that includes a 53-mile underwater cable between Pittsburg and San Francisco, California, completed in Principal contractors for Trans Bay Cable were Siemens and Prysmian, who also were the joint contractors for the Neptune and Hudson transmission projects in New York and Trans Bay Cable VSC-HVDC Converter Station in San Francisco, CA, completed in

7 are expected to be the contractors for West Point. Please see Appendices B and C for additional descriptive information on the proposed technology for West Point, as well as the website WPP understands that responsibility for enacting various components of the comprehensive Energy Highway both transmission and generation -- will be allocated among various parties and projects in a coordinated fashion. WPP will work with the Energy Highway Task Force to design and build a project that best meets the needs of New York State and therefore is prepared to make refinements to West Point Transmission as proposed here, to help achieve the State s goals. Based on our review of the New York State Transmission Assessment and Reliability Study ( STARS ) Phase II Study Report, we believe that, within the overall framework of the Energy Highway, a 1000-MW line between Leeds and Buchanan represents an appropriate size and location for a new transmission facility that can be sited, built, and operated to maximize economic benefit and minimize environmental impacts. For the purposes of this Response, we assume that important transmission upgrades between the New Scotland and Leeds substations, as identified in the STARS Report, will be done by others. However, it would be possible to expand West Point to as much as 2,000 MW of transmission capacity as well as to make the northern interconnection point at New Scotland, rather than Leeds. The 2,000 MW alternative would require two cables installed in the river, as well as either larger or a greater number of converter stations (depending on final configuration of the larger project). Linking to New Scotland would likely be best accomplished by using the existing New Scotland-Leeds transmission corridor, rather than an overland cable route between New Scotland and the River. WPP is prepared to explore this possibility further if desired. As explained in Section III, WPP currently holds two NYISO queue positions that would permit further study of a 1,000-MW, New Scotland-to-Buchanan alternative in addition to the 1,000-MW Leeds-to-Buchanan line described here. 5

8 III. PROJECT JUSTIFICATION West Point Transmission will address the State s objectives as follows: 1. Reduce constraints on the flow of electricity to, and within, the downstate area; and expand the diversity of power generation sources supplying downstate (RFI page 11) West Point is intended to be a backbone transmission corridor enabling electricity to flow from upstate New York to heavily populated areas in the southeastern part of the state. It is envisioned as a key component of a larger set of important transmission upgrades that will unbottle the State s congested transmission system and allow increased flow from the western and northern parts of the state. In conjunction with the West Point route from Leeds to Buchanan, it is assumed that transmission upgrades will occur between Leeds and the New Scotland substation, approximately 40 miles to the north, as well as other major improvements to the north and west of New Scotland. Providing a minimum of 1000 MW of new north-south transmission capacity will clearly promote the ability of more diverse, less costly upstate generation to reach customers in the greater New York City metropolitan area. 2. Assure that long-term reliability of the electric system is maintained in the face of major system uncertainties (RFI page 11). West Point helps assure reliability of the electric system both in the short run and in the long run. The line can be built without impacting existing north-south transmission infrastructure; no facilities need to be taken out of service in order to build West Point. In the long run, as noted above, West Point is envisioned as a permanent backbone of the state s transmission infrastructure using proven technology with a useful life of at least 40 years (and likely far greater). Moreover, the use of VSC-HVDC technology offers the advantages of controllability and voltage stability to the system as a whole while at the same time avoiding or minimizing certain impacts and disadvantages of a conventional AC system. 3. Encourage the development of utility-scale renewable resources throughout the state (RFI page 11). By providing a new major energy pathway, West Point will help create access for upstate renewables to downstate energy markets that are currently stranded by the constrained, aging, and inadequate transmission system. Relieving these constraints not only helps meet the State s 30 percent renewable target all with in-state resources -- but (as noted in the RFI) helps promote energy security, reduce overdependence on only one or two types of resources, and reduce greenhouse gas emissions and other pollutants. 4. Increase efficiency of power generation, particularly in densely populated urban areas (RFI page 12) While West Point, as a transmission facility, does not directly address the efficiency of generation units, it does contribute to improving the overall efficiency of the New York State energy system. Relieving north-south transmission constraints reduces the need to run older, dirtier, and less efficient power 6

9 plants located closer to the load, and helps provide far more optionality for the system to facilitate both economic and environmental dispatch of generation. 5. Other Benefits of West Point Transmission (RFI page 13) In addition to addressing the four major objectives above, West Point also provides benefits corresponding to those listed in the RFI. Create jobs and opportunities for New Yorkers. Removing transmission constraints within New York and encouraging the construction of renewable and other clean forms of generation upstate will clearly provide new job opportunities during construction itself, in increased activity at existing and new generation plants, and through the multiplier effect of stimulating products and services to meet the demands created by increased employment. As noted in the RFI, $1 billion worth of transmission investment has been found to be worth 13,000 FTE years of employment and $2.4 billion in total economic activity. (Note that the preliminary cost estimate for West Point is approximately $1 billion.) Contribute to an environmentally sustainable future for New York State. To the extent West Point helps open up access to more renewable and low-emission generation upstate, it will directly support a more environmentally sustainable future. In addition, the facility will not impact Environmental Justice areas, as the transmission cable itself will be buried or submerged, the converter stations will require small footprints of approximately five acres each and be located well outside of densely populated areas, and the facility will produce no emissions or discharges. Apply advanced technologies that benefit system performance and operations. The Siemens VSC-HVDC technology employed for West Point has the dual advantage of being both commercially available and representative of the future trend in HVDC transmission (see Section VI.D and Appendices B and C for additional information). A key feature of VSC-HVDC is the ability to provide voltage support for the system as a whole, thus contributing to stability and reliability. An added benefit, in comparison to AC solutions, is the absence of increased shortcircuit currents during system disturbances, thereby reducing electric system upgrade costs. Maximize New York State electric ratepayer value in the operation of the electric grid. The RFI notes that existing constraints in the electric system impose significant congestion costs on electric consumers and severely limit the ability to transmit lower-cost electricity to load. By creating long-term energy infrastructure, West Point will create a broader path for north-south electricity to flow and help relieve congestion and create markets for lower-cost power. In addition, opening up markets to renewables will help reduce costs imposed by pollution and other externalities. Adhere to market rules and procedures, and make recommendations for improvement as appropriate. The WPP team has demonstrated its understanding of NYISO s rules and procedures through the successful development of the Neptune and Hudson transmission projects, both of which involved complex interconnection engineering and construction work. (We have similarly gained extensive familiarity with the rules of other entities affecting energy markets and facility operation, including FERC, NERC, and the applicable regional reliability 7

10 organizations.) Through these experiences, we understand that there may be significant system costs associated with system interconnection and are prepared to pay these costs as part of the financing for West Point Transmission. We have initiated the NYISO interconnection process for West Point Transmission in the form of two separate requests that represent possible alternative configurations of the facility: Queue Position #357, 1000 MW, between New Scotland and Buchanan or Roseton; Queue Position #358, 1000 MW, between Leeds and Buchanan. 8

11 IV. FINANCIAL A. Private-Public Partnership WPP has conceived West Point Transmission to be a true private-public partnership, generally following the model created for the Neptune and Hudson transmission projects. For each of these projects, PowerBridge-managed project companies took on the tasks (and risks) associated with real estate acquisition, permitting, private financing, construction, interconnection, commissioning, and operation of the facilities for the benefit of New York State public entities the Long Island Power Authority for Neptune, and the New York Power Authority for Hudson. We believe we have the experience and knowledge to replicate this model with adjustments as necessary and appropriate to meet the current and long-term needs of New York State for West Point. For both Neptune and Hudson, the basis for financing was a long-term agreement between the public party and the private party that assured a revenue stream sufficient to support financing in the private capital markets. As discussed further below, while this approach is widely accepted and proven to be successful, it is not necessarily the only alternative for private sector financing. In actuality, we view the Energy Highway concept to be a multi-party partnership that ideally will involve the active participation of State agencies, private developers, regulated electric utilities, local governments, NYISO, and a wide variety of other stakeholders. The Energy Highway will not be built as one single project, but rather as a closely coordinated package of transmission and generation projects with each part of the package executed by different sponsors based on their ability to execute their assigned responsibilities. Thus, WPP seeks to be responsible for developing and building the backbone north-south transmission link between Leeds and Buchanan, while other parties, public or private, will be responsible for other important transmission upgrades as well as new and re-powered generation all under the umbrella and oversight of New York State. B. Financial Structure and Funding Options While the global capital markets have seen significant volatility over the last several years, capital for well structured infrastructure projects, such as transmission, remains readily available to developers with proven track records. In general, privately financed transmission projects have been structured around one of two revenue models: (a) a long term transmission capacity purchase agreement or (b) a cost-of-service, rate-based model. The Neptune and Hudson projects are examples of projects financed on the basis of a long term transmission purchase agreement. Those projects have 20 year contracts with LIPA and NYPA, respectively. The projects receive their revenue solely on the basis of an availability-driven tariff. If the transmission line is available for operation, then the project receives its monthly tariff payment, irrespective of the actual energy that flows through the line. The Customer is therefore free to optimize the use of the asset for its benefit and that of its own customers. The long term transmission capacity purchase agreement framework is similar to how most gas pipelines are financed. A major advantage of this type of structure for the Customer lies in the allocation of risk. The project entity (developer) takes on all development, permitting, design and construction risks and will not earn 9

12 revenues until the transmission line is built to pre-agreed specifications and successfully goes into service. In addition, all construction and operating cost risks are generally borne by the project owners. If there are cost overruns in constructing or operating the project, the tariff payments generally would not be increased. Examples of projects financed on the rate based model include the Competitive Renewable Energy Zone ( CREZ ) projects in Texas, which involve about 400 miles of 345-kV transmission to areas of the state with high-value renewable resources; and the Path 15 and Trans Bay projects in California. The rate based model is more similar to how investor-owned utilities recover their costs for constructing new transmission and distribution lines, or how Congestion Assessment and Resource Integration Study ( CARIS ) projects are proposed to recover costs through the NYISO tariff. The revenue requirements of the project company are determined each year on the basis of its prudent operating costs, cost of debt capital, agreed return on equity and applicable capital structure. Under this framework, greater amounts of risk are usually borne by the ratepayers than under the long term purchase agreement model. Increases in capital and/or operating costs, if deemed to be prudently incurred, are passed through to the ratepayers. In addition, unlike the long term purchase agreement model, the revenue requirement is usually not adjusted for poor operating performance such as reduced availability. WPP and its financial sponsors are very comfortable implementing a project under either of the two financing frameworks. To date, the West Point development team has raised over $1.5 billion in capital to finance the development, construction and operation of the 660 MW Neptune project and the 660 MW Hudson project. Each of those projects utilized 20 year Firm Transmission Capacity Purchase Agreements ( FTCPA ) as the cornerstone for establishing the credit to raise the financing. However, WPP s investors have also used other financial structures, including the rate based model. WPP would be willing to use a very similar contractual framework as that used for Neptune and Hudson -- in fact, the FTCPAs from Neptune and Hudson could be used as a starting point for a contract, since each has proven to be financeable in the capital markets. Not only would this provide a high degree of assurance of the ability to finance the project, but it would also be an efficient way to develop the contractual framework. Twenty (20) years should be viewed as a minimum term for the contract. A longer term contract of years would most likely lead to an overall lower annual tariff payment and still remains inside of the expected useful life of an HVDC transmission system. As with Neptune and Hudson, creditworthy counterparties such as NYPA or LIPA would be viewed favorably by the capital markets. In addition, one or more of the investor-owned utilities serving the ratepayers of New York who benefit from the project could also be the counterparties. The key for accessing the required capital in a cost effective manner would be for the contract counterparties to have an investment grade credit rating. The rate based framework would also be acceptable to WPP. There may be means to modify the rate based model structure somewhat in order to insulate ratepayers from certain risks. For instance, it may be possible to cap ratepayers exposure to cost overruns, and/or to make rate recovery contingent on the project achieving a minimum performance level, thereby mitigating the construction completion risk for ratepayers. Similarly, it may be possible to structure an adjustment mechanism to the annual revenue requirement on the basis of the actual availability of the transmission line. WPP is amenable to working through any number of different risk allocation structures, provided there is a balance between the risks and the rewards. 10

13 As noted above, we believe there will be plenty of capital available for a well structured transmission project. The development capital for West Point is currently being provided by three principal Equity Sponsors: Energy Investors Funds ( EIF ), which was founded in 1987 as the first private equity fund manager to invest exclusively in the power sector, and has raised more than $4 billion in equity capital in support of more than $15 billion worth of projects, including the Neptune and Hudson transmission projects. Starwood Energy Group, an affiliate of Starwood Capital Group Global, LLC, a privately held global investment management firm based in Greenwich, Connecticut that is also a principal investor in Neptune and Hudson. NRG Energy, a Fortune 250 wholesale power generation company with nearly 25,000 MW of generating assets in North America, including nearly 4,000 MW in New York. In return for providing this development capital, the Equity Sponsors retain an option to provide the permanent equity capital for the project, when it reaches the construction financing stage. On the debt side, we anticipate some combination of the commercial bank market and the institutional private placement market will be the financing source for West Point. Each of these markets has its pluses and minuses for financing the construction and operation of large, capital intensive, long-lived energy assets. Neptune and Hudson were predominantly financed in the institutional private placement market, with placements totaling more than $1 billion. The CREZ projects in Texas, on the other hand, were predominantly financed in the bank market. As of today, each of those markets would have sufficient capacity on its own to finance West Point, which is expected to have a capital cost on the order of $1 billion. Since access, competitive pressures, and relative pricing in each of these two markets can vary based on market conditions, we would not determine a final financing plan until much closer to the time of execution. However, the WPP development team has significant experience in raising capital in each of the markets and is highly confident of our ability to raise the necessary debt capital at the appropriate time. 11

14 A. Federal, State, and Local Permits V. PERMIT/APPROVAL PROCESS West Point Transmission will require two comprehensive permits: An Article VII Certificate of Environmental Compatibility and Public Need from the New York State Public Service Commission, and a Department of the Army Permit issued by the U.S. Army Corps of Engineers under Section 10 of the Rivers and Harbors Act and Section 404 of the Clean Water Act. Approvals or consents from other agencies will also be required, including the office of Coastal Zone Management within the NY Department of State, the State Historic Preservation Office, the U.S. Fish & Wildlife Service, and National Marine Fisheries Service. The facility will also require a work permit and grant of easement from the New York State Office of General Services for the use of state underwater lands. Various other permits, approvals, or consents may be needed from local governments depending on the final siting of the facility. Finally, West Point must participate in the NYISO interconnection process and execute an Interconnection Agreement with the NYISO and interconnecting utilities. The West Point development team has extensive relevant experience obtaining this entire range of permits and approvals in connection and additionally, with relevant permits and approvals in New Jersey in connection with the Neptune and Hudson transmission projects. B. Permit and Approval Status WPP has initiated environmental and routing studies and in-water surveys of the river route for the preparation of applications for an Article VII Certificate and a U.S. Army Permit. These studies will be completed in 2012, and applications submitted in the first or second quarter of As noted previously, WPP has filed two Interconnection Requests with NYISO corresponding to potential configurations of the facility: A 1000-MW line between New Scotland and Roseton or Buchanan (Queue Position 357), and a 1000-MW line between Leeds and Buchanan (Queue Position 358). An Interconnection Feasibility Study Agreement between WPP and NYISO was executed in June 2011 for Queue Position 358, Leeds-to-Buchanan, and this study is expected to be completed by the late summer of C. Permitting Considerations The WPP development team has extensive experience with the Article VII and U.S. Army Permit process, having obtained these (and other) key permits for the Neptune and Hudson transmission projects. We believe we have a well-grounded understanding of the permitting process, and are not aware of any provision of federal or state laws or rules that present an inherent obstacle to the successful development of West Point. 12

15 VI. ADDITIONAL INFORMATION A. Property The Neptune and Hudson projects, the WPP development team has gained extensive experience in obtaining all necessary rights for the use of real estate for the purpose of building and owning transmission facilities that are comparable to West Point. Such rights were obtained without eminent domain authority, and range from fee ownership to long-term licenses or easements, obtained from both private sellers and public entities. It should be noted that obtaining all such rights, along with government approvals to use the property for the intended purpose, is a necessary precondition to obtaining financing for such a project. While securing the real estate for linear projects like a transmission line can be a challenge, real estate acquisition needs for West Point are not particularly extensive. Most of the transmission line itself will be buried beneath the Hudson River, requiring a New York State Office of General Services (OGS) license and easement. For the converter stations, West Point will benefit from the fact that VSC-HVDC technology allows construction using a relatively small footprint of approximately five acres for each station. Near the proposed northern terminus near Athens, New York, there are extensive areas of suitable unoccupied land, as well as an existing, short corridor leading to the Hudson River for the landbased transmission line. Near the southern terminus in Buchanan, WPP is in preliminary discussions with the owner of property in close proximity to the Buchanan substation. WPP does not expect to require or seek eminent domain authority for its real estate needs. B. Projected In-Service Date and Schedule WPP has begun environmental studies and in-water surveys that will enable us to submit an application for a New York State Article VII Certificate, and a U.S. Army Corps of Engineers permit, in the first or second quarter of Beyond this, the schedule to complete the facility is dependent on the length of time required to obtain the major permits, as well as work window restrictions for in-water cable installation that might be imposed in the permits. Our experience with the Neptune and Hudson projects suggests that a period of approximately 30 to 36 months for construction and commissioning is likely to be appropriate. This period includes engineering and design, and procurement under an Engineering-Procurement-Construction ( EPC ) contract such as that used for the Neptune and Hudson projects. Thus, assuming approximately one year for review and issuance of the principal permits, we envision the commercial operation date for West Point to be during Calendar Year C. Interconnection Information As discussed previously, our currently preferred route extends from the National Grid Leeds substation near Athens, New York to the Consolidated Edison Buchanan substation. We favor this route primarily due to cost and environmental considerations, as the Leeds substation is approximately two miles from the Hudson River and there is an existing utility corridor to the River that might be utilized. By contrast, the New Scotland substation is approximately 10 miles from the River with a much more complicated overland route. Nonetheless, we are aware that upgrading the existing transmission capabilities between New Scotland and Leeds, using the existing corridor, will be essential to realization of the Energy Highway objectives and providing meaningful access to points north and west of New Scotland. We currently assume that the New Scotland-Leeds upgrade will be done by others as part of the 13

16 comprehensive Energy Highway implementation. However, we are entirely open to incorporating this upgrade into the West Point project if doing so best meets the needs of New York State. Selecting the Buchanan substation as the southern terminus for West Point has several clear advantages, including available physical space for interconnection at the substation, close proximity to the River, and the capability of using existing transmission facilities that run to New York City. D. Technical Information WPP intends to use the same principal contractors that successfully built the Neptune project and are currently building the Hudson Transmission project: Siemens Energy is a global technology company that specializes in HVDC installations worldwide, and has rapidly advanced its VSC-HVDC capabilities in the form of what it calls HVDC-Plus. The latest U.S. example of HVDC-Plus is the Trans-Bay Cable Project from Pittsburg to San Francisco, California, which Siemens completed in 2010 in conjunction with Prysmian Cables & Systems. Globally, Siemens is responsible for 46 HVDC installations, including those currently in construction. These include both classic HVDC such as in the Neptune and Hudson projects, and, more recently, HVDC-Plus (see Appendix B). Siemens is currently in the process of building five HVDC-Plus facilities in Europe with capacities up to 2000 MW. Four of these link offshore wind developments to the mainland grid. A landbased HVDC-Plus facility, called INELFE, is a 2000-MW link between France and Spain, scheduled for completion in Detailed information regarding Siemens HVDC- Plus technology is included in Appendix B. Prysmian Cables & Systems is also a global company specializing in the manufacture and installation of power cables, especially for submarine installations. Prysmian was responsible for design, manufacturing, and installation of the 65-mile-long Neptune HVDC land and sea cable system as well as the 8-mile AC cable for the Hudson Transmission project, in addition to the recently completed Trans Bay Cable project and many other cable installations around the world. Prysmian s experience with HVDC cables includes 23 installations wordwide. Additional detailed information about Prysmian experience and cable technology is included in Appendix C. 14

17 Useful Life of Project Components. The expected lifespan of an HVDC system such as West Point is generally considered to be at least 40 years, and may be reasonably expected to extend beyond that with proper maintenance. Siemens portfolio of operating HVDC installations extends back to the mid- 1970s. Prysmian s portfolio of HVDC cable installations extends back to the early 1960s. Equipment Warranties: Generally, established equipment providers such as Siemens and Prysmian expect to provide reasonable and satisfactory warranty terms. This was true of Neptune and Hudson and can be expected to be true of West Point. Typically, warranty terms are the subject of negotiations between the Owner and the Contractor, and may have an impact on pricing of the equipment. WPP believes that the warranty terms between the Owner and the Contractor will correspond to the warranties reasonably required by the Customer. E. Construction As described previously, WPP will negotiate a comprehensive EPC Contract with its principal contractors, Siemens and Prysmian, as a consortium. Both companies have extensive experience working in New York State. Under the EPC arrangement, the contractors are responsible for facility design and engineering, manufacturing and/or procuring all equipment and materials, all construction and installation work, and final commissioning and testing. While much of the converter station equipment requires specialized manufacturing, we would expect that many of the basic materials and components for civil and structural work on the converter station would be provided by local suppliers. Likewise, construction labor is likely to be local. Both Siemens and Prysmian are accustomed to working under Project Labor Agreements. Project Decommissioning: For Neptune and Hudson, cable decommissioning is addressed by the major permits, which typically call for a detailed decommissioning plan tailored to the specifics of the project. In the case of an underwater cable, abandoning in place rather than removal is usually considered preferable in order to avoid environmental disturbance. Operating converter stations do not require more than minimal amounts of regulated substances and will not present an environmental liability upon decommissioning. F. OPERATIONS Performance: The performance of a transmission system such as West Point is typically measured on the basis of its availability: the percentage of time in a given calendar period in which the system is capable of performing as required, allowing for scheduled maintenance outages. Availability targets are set contractually between Owner and Contractor, and Owner and Customer, and are often subject to negotiation within a relatively narrow band. The Neptune transmission project has averaged over 97 percent availability during its five years of operation, consistent with benchmarks for similar HVDC systems. Safety Considerations: Safety considerations for a VSC-HVDC converter station are comparable to those observed in a typical major electrical substation. Since the line itself will be buried underground or beneath the Hudson River bed, hazards associated with contacting the line are extremely remote. 15

18 G. SOCIO-ECONOMIC Local Economic and Employment Impacts: As discussed previously and already noted in RFI, major transmission investments have been shown to produce a significant positive impact, directly and indirectly, on job creation and economic activity. An important goal of the Energy Highway is to improve transmission infrastructure that will encourage future opportunities for new generation in upstate New York. As a critical component of these transmission improvements, West Point will play an important role in stimulating these opportunities. In local communities hosting the West Point converter stations, we would expect to negotiate development agreements with the affected municipalities that would provide them with significant long-term sources of additional revenue. The WPP team has negotiated such agreements in connection with the Neptune and Hudson transmission projects, and can provide references in North Hempstead, New York, and in Sayreville and Ridgefield, New Jersey. Neighborhood Impacts; Public Safety. The West Point cable will be buried underground or under the Hudson River, and therefore will produce no visual or other neighborhood impacts, or public safety hazards. The underground portions of the cable route are expected to be very short and not routed through neighborhoods or densely populated areas. The converter stations will require approximately five acres each. As noted above, they will be sited close to their interconnection points away from densely populated areas, and designed and located so as to minimize visual impacts. Appropriate security measures, such as those taken at an electrical substation, will be used to protect public safety. WPP is familiar with the typical Article VII Certificate requirements regarding safety, aesthetics, and other public impacts, and is fully prepared to comply with these. In addition, the WPP development team has extensive experience working cooperatively with local officials and other stakeholders to assure that local public concerns are suitably addressed. H. FINANCIAL Please see the discussion in Section V.B, above. I. ENVIRONMENTAL Environmental impacts of West Point will primarily occur during construction, since the cable will be buried beneath the Hudson River for a distance of approximately 75 miles between Athens and Buchanan. WPP is well aware that this portion of the River includes environmentally sensitive areas, including habitat for a variety of valuable species. We have performed preliminary routing studies showing that many of the especially sensitive areas in the River can be avoided altogether. For those areas that cannot be avoided, impacts can be avoided or minimized by restricting construction to seasonal windows that permit in-water activity only during times of the year when sensitive species are not present. WPP is very familiar with NYSDEC and USACOE expectations and requirements regarding submarine cable installation, as well as Coastal Zone Management Act consistency considerations. 16

19 Each of the West Point converter stations will occupy approximately five acres, requiring clearing of unoccupied land. Potential impacts to affected land, and appropriate mitigation, will be the subject of studies conducted in preparation of permit applications. Based on WPP s experience and current knowledge of the cable route and likely converter station sites, we expect to be able to develop an environmentally acceptable construction plan in consultation with jurisdictional agencies, after performing the necessary land and river-based studies now under way during During operation, environmental impacts of West Point will be negligible, as the transmission cable will not be visible, and the converter stations produce no emissions or discharges into the environment. To the extent environmental impacts of construction cannot be avoided, WPP will take necessary measures to minimize the impacts and to provide mitigation through restoration and enhancement, either directly or by funding mechanisms as appropriate. In addition, we will work closely with stakeholder groups such as Riverkeeper, Scenic Hudson, and the Natural Resources Defense Council ( NRDC ) to assure that their concerns are satisfactorily addressed. The environmental impacts of a high-voltage cable installation in the Hudson River compare favorably to the impacts of installing high-voltage overhead transmission lines. Underwater cable installation techniques are designed to minimize such impacts as turbidity, and disturbance to habitat can be minimized or avoided by careful routing and observance of seasonal installation windows. In operation, there are no visual impacts or issues related to electro-magnetic fields ( EMF ) extending to abutting properties. By contrast, installation of high-voltage overhead lines, even in an existing corridor, may require larger structures or widening of the corridor, creating the potential for increased visual impacts or other effects on abutting properties. J. CONTRACT/RFP STATUS WPP has not sought any contracts for the project or made any submissions to any state agency or authority in response to any Request For Proposal. K. PUBLIC OUTREACH AND STAKEHOLDER ENGAGEMENT WPP expects a wide range of potential stakeholders, in addition to jurisdictional agencies, to be interested in West Point as plans for the project are developed, such as: River interests such as Riverkeeper and Scenic Hudson; Environmental groups such as NRDC, Sierra Club and other organizations with interests in promoting sustainable energy alternatives; Organizations promoting economic development; Labor unions; Counties and municipalities along the river route; Municipalities in which the converter stations will be sited; Other county and municipal governments in northern and western New York where there is high potential for windpower development; Interconnecting utilities. 17

20 We will pro-actively engage such stakeholders, seek to understand their concerns, and address these concerns to the greatest extent possible, both prior to filing permit applications and through the Public Service Law Article VII process, which requires the establishment of an intervener fund. Studies undertaken in connection with major permit applications will be used to demonstrate the extent of impacts and how these will be avoided, minimized, or mitigated. WPP will consider providing financial support for appropriate mitigation, restoration, or enhancement measures in response to stakeholder concerns. WPP believes that public outreach efforts should proceed in parallel with project development, beginning with conceptual-level information provided on a one-to-one basis for the purposes of receiving feedback before progressing to more detailed discussions of specific concerns and means of addressing them in broader public forums. We have begun the process of describing and explaining West Point Transmission to stakeholders on a selective basis and expect these efforts to increase as specific information about both the project and the Energy Highway continues to evolve. 18

21 APPENDIX A WEST POINT PARTNERS KEY PERSONNEL

22 Edward M. Stern, President and CEO Ed Stern, President and CEO of PowerBridge, LLC, has more than 25 years of experience leading the successful development, financing, and operation of major energy and infrastructure projects. Under his guidance, Neptune Regional Transmission System, LLC, a PowerBridge company, developed, constructed, and since 2007 has operated the Neptune Project a 660 MW, 65-mile-long HVDC undersea and underground electric transmission system that interconnects the PJM market at Sayreville, New Jersey with Long Island, New York. Through PowerBridge, Ed is leading the development of other major energy infrastructure projects, including the Hudson Transmission Project, linking the PJM grid to New York City, the Green Line Project, which will link renewable energy resources in northern New England with the Boston market and West Point, linking upstate New York resources with the New York metro area. From 1991 through 2003, Ed was employed by Enel North America, Inc. (a subsidiary of Enel SpA, an Italian electric utility company) and its predecessor, CHI Energy, Inc., an energy company which owned or operated nearly one hundred power plants in seven countries, specializing in renewable energy technologies including hydroelectric projects and wind farms. While at Enel North America, Inc. and CHI Energy, Inc., Ed served as General Counsel and, commencing in 1999, as President, Director and Chief Executive Officer. Prior to joining CHI, Ed was a Vice President with BayBanks, Inc., a Boston-based $10 billion financial services organization, where for six years he specialized in energy project finance, real estate restructurings and asset management. Ed currently serves on the Boards of Directors of Rentech, Inc. (AMEX: RTK), a global leader in the development of ultra-clean fuels and chemicals, and Capital Access Network, Inc., a small business lender; is on the Board of Managers of Deepwater Wind Holdings, LLC, an offshore wind energy developer; and serves on the Advisory Board of Starwood Energy Group Global, LLC, a private equity firm specializing in energy and infrastructure investments. Ed received B.A., J.D. and M.B.A. degrees from Boston University and is a member of the Massachusetts Bar and the Federal Energy Bar.

23 Ernest B. Griggs, Senior Vice President and Project Manager Ernie Griggs joined PowerBridge as the Project Manager for Neptune in He currently oversees Neptune operations, and the construction of the Hudson Transmission Project, and also is involved in the technical and construction aspects of developing the West Point Project. Ernie brings over 30 years of large scale project management, HVDC, and electric power industry experience in bulk power generation, transmission and operations, primarily in the northeastern United States. Ernie was previously employed by New England Power Co., where his responsibilities included project management of Phase I and II of the 2,250 MW HVDC Interconnection between New England and Hydro-Quebec, oversight of a 1,200 MW hydroelectric system, and project management of the Bear Swamp hydroelectric pumped storage project. Ernie graduated from Vermont Technical College with a degree in Electromechanical Engineering and from Lesley University with a degree in Management. Jeffrey T. Wood, Senior Vice President Jeff Wood is primarily responsible for leading the financing effort for PowerBridge projects such as Hudson Transmission and West Point Transmission. Jeff is a former managing director at the investment bank Société Générale, where he was responsible for serving as financial advisor and for arranging $600 million in non-recourse project financing for the Neptune transmission project, a 660-MW, 51-mile undersea transmission cable completed in June of After joining PowerBridge, he had primary responsibility for raising approximately $850 million in non-recourse project financing for Hudson Transmission. Jeff has nearly 20 years of experience in project finance with involvement in raising more than $7 billion in debt and equity. Prior to joining PowerBridge, he was a Senior Vice President with Noble Environmental Power of Essex, Connecticut, where he was responsible for raising more than $700 million of non-recourse debt and $200 million of tax equity for a portfolio totaling 330 MW of wind power in New York State. His finance experience also includes positions with J.P. Morgan Chase and Wachovia Securities, where he has been active in the financing of major energy projects both in the U.S. and internationally. Jeff graduated from the University of Tennessee with a B.S.degree, magna cum laude; he also holds an MBA from the Fuqua School of Business at Duke University. Thomas G. Beaumonte, Chief Financial Officer and Treasurer Tom Beaumonte has more than 20 years experience as a senior financial executive in planning, operations, strategic planning, budgeting, cost reduction and financial reporting for both domestic and international companies. For PowerBridge, he is responsible for financial accounting, budgeting, reporting, and investor relations for the Neptune, Hudson, and other project companies managed by PowerBridge. Prior to joining PowerBridge at its inception, Tom served as Vice President, Comptroller and Treasurer of Enel North America, Inc. and its predecessor company, CHI Energy, Inc.

24 Previously, Tom served as Director of UBS Warburg, Inc. of New York, Treasurer and Assistant Controller of Republic New York Securities Corporation of New York, Vice President of Lehman Brothers Holdings of New York, and Supervisory Senior at Ernst & Young of New York. Tom is a graduate of Lehigh University (B.S.), a Certified Public Accountant and is licensed by the National Association of Securities Dealers (Series 7). J. Christopher Hocker, Vice President, Planning Chris Hocker joined PowerBridge as Vice President of Planning with 20 years of electric power industry experience that encompasses project planning, licensing and permitting, government and community relations, business development, and corporate communications. Chris was responsible for compliance with all major permits during construction of the Neptune facility and led the successful permitting effort for the Hudson Transmission Project. He is responsible for assuring permit compliance during the construction of the Hudson Transmission Project and will spearhead permit applications and compliance on the West Point project as well. Prior to joining PowerBridge, Chris was employed by Enel North America, Inc., and its predecessor company, CHI Energy, Inc. from 1990 to While with CHI, he initially focused on licensing, planning, and government and community relations for a proposed 1500-MW power project, was responsible for preparing a successful siting application for the project generating facility as well as a separate siting application for a related 345-kW transmission line. He later served as Senior Vice President, Corporate Affairs, for CHI and Enel North America, part of the senior management team responsible for corporate development. He served on the board of directors of the National Hydropower Association, a Washington, D.C.-based trade association of utility and independent hydropower owners, for nine years, including one year as president of the association in Previously, Chris was a communications consultant for companies involved in the engineering, energy, and environmental fields and a contributing editor of Independent Energy magazine for several years, writing numerous articles on various business aspects of the independent power industry. He holds a B.A. degree from Stanford University. Charles J. Micciche, Vice President, Construction Charlie Micciche has over 20 years experience in managing the operation, maintenance and construction of power generation and transmission facilities. Involved in the development of the Neptune project from its earliest stage through completion of construction, Charlie is currently responsible for overseeing the installation of the Hudson Transmission Project cable between Ridgefield, New Jersey and Manhattan s W. 49 th Street and the construction of the back-to-back converter station in Ridgefield, New Jersey. Prior to joining PowerBridge, Charlie managed the construction of a 500 MW combined cycled gas fired plant in Westbrook, Maine followed by a similar facility in Johnston, Rhode Island. As project manager for both projects he had overall responsibility for achieving safety, productivity, quality, schedule and financial goals.

25 Charlie previously served as Manager of Construction for Public Service Electric and Gas in New Jersey. In this capacity he managed a $1.5 billion, five-year repowering program. He also was a plant manager and served in a variety of department head roles involving maintenance, controls and operations at conventional and nuclear facilities. Charlie graduated from the Stevens Institute of Technology with a Bachelor of Engineering and has attended the Rutgers Senior Management Program and the Texas A&M Construction Executive Program. James P. Nash, Vice President, Engineering Jim Nash provided engineering and consulting services during the development and construction phases of the Neptune Transmission Project. He officially joined the PowerBridge team in 2007 and continues to maintain an ongoing involvement in the operation of Neptune, while principally responsible for overseeing all aspects of engineering during the construction of the Hudson project and the development and of West Point project. Jim has more than 24 years experience in the fields of electric power engineering and project development for various generation, transmission, and distribution projects. Jim s professional career includes multiple assignments while with the New England Electric System (NEES, now National Grid US) including its Global Transmission group. He was Project Director for the Cross Sound Cable Project, later purchased and developed by TransEnergie US, which Mr. Nash joined in He was NEES Project Manager for the first 26-mile Nantucket Submarine Cable Project and Project Engineer for the 800-ampere Lisbon Ground Electrode serving the New England Hydro Quebec HVDC Intertie. While with EBASCO (now Washington Group) from 1987 to 1993, Jim worked on several substation projects including the NYPA to Long Island Y-49, 345 kv Submarine Cable and the 345 kv cable interconnection for Consolidated Edison s Goethals Substation to the Linden Cogeneration Facility in New Jersey. Jim received a B. S. degree in Electrical Engineering from Clarkson University in 1982, is a Registered Professional Engineer in the Commonwealth of Massachusetts, and a Senior Member of the IEEE Power Engineering Society. James T. Sullivan, Vice President, Operations Jim Sullivan joined PowerBridge in June of 2011 and is primarily responsible for O&M and reliability compliance for Neptune and for development of O&M procedures for the Hudson Transmission Project. Jim has more than 30 years of experience in the engineering, operations, maintenance, and management of electric systems, primarily for High Voltage Direct Current (HVDC) transmission systems, with more than 20 years developing operating procedures and compliance with reliability requirements for HVDC systems. Previous work experience includes 10-plus years as a supervisor for a 2000-MW HVDC converter terminal in New England; and seven years with National Grid as Supervisor and Director of HVDC Operations and Maintenance for the New England/Hydro Quebec HVDC Interconnection.

26 Most recently Jim served as a consultant specializing in developing O&M and reliability compliance procedures for several major clients, including the Neptune Regional Transmission System. Jim has extensive education and training in the fields of electrical and electronic design, including specialized training in HVDC controls and protection and in business management. Edward Krapels, Chief Executive Officer, Anbaric Transmission, LLC Ed Krapels is a developer of energy transmission projects in the United States and a leading authority on energy issues, markets, and policy. He is the Founder of Anbaric Holding, LLC, an organization involved in the development of various energy projects including Neptune Regional Transmission System, and the Hudson Transmission Project. He is Chairman of both Atlantic Energy Partners, the initial developer of Neptune and New England Independent Transmission Company, which is developing the Green Line in New England. In 2008, he joined several partners in the development of Viridity LLC, a company dedicated to developing projects that couple intermittent energy sources with demand response programs. Through controlled demand and distributed generation, Viridity uses smart grid technology to optimize power consumption of large campus-like institutions, such as universities or industrial complexes, in order to control both energy resources and demand simultaneously at multiple locations. A former energy consultant and advisor, Ed has provided valuation and due diligence services to prominent investors in the energy arena, assisted major utilities, end users, and government agencies in the risk management sector of the energy industry and advised clients on the importance of the location energy asset location.. Ed holds a B.A. from the University of North Carolina, Chapel Hill, a M.A. from the University of Chicago, and a Ph.D. from the Johns Hopkins University.

27 APPENDIX B TECHNICAL INFORMATION SIEMENS VSC-HVDC SYSTEM 1. Siemens HVDC Project Listing 2. Siemens HVDC-Plus Presentation

28 HVDC Classic transmission projects executed by Siemens Customer & Project Name Location of Installation Rated Power DC Voltage Commercial Operation National Grid / Scottish Power Western HVDC Link SNC AltaLink Western Alberta Transmission Link (WATL) ATCO East DC Link Project Fingrid, FIN / Elering, EST EastLink 2 China Northern Power Grid Nuozhadu Guangdong Hudson Transmission Project Hudson (Back-to-back) Energotrans Ltd. Black Sea Transmission Network Project Power Grid Company of Bangladesh Ltd. BtB Bangladesh CSG Xiloudu Guangdong Transpower New Zealand Ltd. Inter Island Connector Pole 3 Red Eléctrica de España COMETA Adani Power Ltd. Mundra Haryana BritNed Development Limited Brit-Ned SGCC Xiangjiaba Shanghai Energinet.dk Storebælt Power Grid Cooperation of India Ballia Bhiwadi Interconnector SGCC Ningdong - Shandong Hunterston Kelsterton, UK 2250 MW 600 kv 2015 Sunnybrook Crossings Canada 1000 MW 500 kv 2014 Heathfield New Canada 1000 MW 500 kv 2014 Anttila, Finnland Püssi, Estonia 670 MW 540 kv 2014 Pu`er Jiangmen 5000 MW 800 kv 2013 New York 600 MW 170 kv 2013 Akhaltsikhe, Georgia 2 x 350 MW 96 kv 2013 Bheramara 500 MW 158 kv 2013 Zhaotong Coghua 2 x 3200 MW 500 kv 2013 Haywards (North Island) to Benmore (South Island) Valencia Mallorca Spain Gujarat province to Haryana province Isle of Grain, UK - Maasvlakte, Netherlands 2 x 350 MW 350 kv x 200 MW 250 kv MW 500 kv x 500 MW 450 kv 2011 Xiangjiaba Shanghai 6400 MW 800 kv 2010 The islands Funen (Fyn) and Zealand (Sælland) in Denmark Uttar Pradesh province to Rajasthan province 600 MW 400 kv MW 500 kv 2010 Ningdong Shandong 4000 MW 660 kv 2010 China Southern Power Grid Guizhou-Guangdong II Neptune RTS Neptune RTS Xingren / Guizhou Shenzhen / Guangdong USA / New Jersey New York 3000 MW 500 kv MW 500 kv E T PS S 1 Page 1 of 3

29 Customer & Project Name Location of Installation Rated Power DC Voltage Commercial Operation Power Grid Cooperation of India Ltd. East South Interconnector II National Grid Australia Basslink Interconnector Xcel Energy Lamar China Southern Power Grid Guizhou Guangdong II Line ± 500 kv DC Transmission Project Sate Power South Company (SPSC) Orissa province Karnataka province Loy Yang / Victoria to George Town / Tasmania 2000 MW 500 kv 2003 / MW 400 kv 2006 Lamar / Colorado / USA 210 MW 63.6 kv 2005 Xingren / Guizhou Shenzhen / Guangdong 3000 MW 500 kv 2005 Guizhou Guangdong 3000 MW 500 kv 2004 Gui Guang Manitoba Hydro, Winnipeg, Canada Nelson River Bipole 1, Pole 2 Valve Replacement Bonneville Power Administration (BPA) Celilo Mercury Arc Replacement Project Moyle Interconnector Ltd. (MIL), Northern Ireland Moyle Interconnector Electricity Generating Authority of Thailand (EGAT) Tenega National Berhad (TNB) Thailand Malaysia China Southern Power Grid Tian Guang HBC, Lisbon, Portugal ESCOM, Johannesburg, South Africa Radisson Converter Station on Nelson River Dorsey Converter Station near Winnipeg both in Manitoba, Canada 1000 MW 500 kv 2004 The Dalles, Oregon, USA 3100 MW 400 kv 1997 / 2004 Northern Ireland, Scotland 2 x 250 MW 2 x 250 kv 2001 Khlong Ngae Gurun 300 MW 300 kv 2001 Tianshengqiao Guangzhou 1800 MW 500 kv 2000 Songo, Mazambique Apollo, South Africa 1920 MW 533 kv 1975 / 1998 Cohora Bassa Los Angeles Department of Water and Power, California, USA (LADWP) Sylmar Converter Station East, Los Angeles 550 (825) MW 500 kv 1995 Sylmar East Valve Reconstruction American Electric Power, Ohio, USA (AEP) Texas, Titus Country near Mount Pleasant 600 MW 180 kv 1995 Welsh HVDC Converter Station (Back-to-back) E.ON Munich, Germany Etzenricht (Back-to-back) Österreichische Elektrizitätswirtschafts Aktiengesellschaft (Verbundgesellschaft, VG) Etzenricht, near Weiden / Oberpfalz 600 MW 160 kv 1993 Southeast of Vienna, Austria 600 MW 145 kv E T PS S 1 Page 2 of 3

30 Customer & Project Name Location of Installation Rated Power GK-Wien-Südost (GK-SO) (Back-to-back) China National Technical Import & Export Corporation Ge-Nan Western Area Power Administration (WAPA) DC Voltage Rectifier station in Gezhouba (Central China), Inverter station in NAn Qiao (about 40 km from shanghai) 1200 MW 500 kv 1989 Sidney, Nebraska, USA 200 MW 50 kv 1987 Commercial Operation Virginia Smith Converter Station (Back-to-back) Hydro Quebec Montreal, Canada Poste Châteauguay (Back-to-back) Österreichische Elektrizitätswirtschafts Aktiengesellschaft (Verbundgesellschaft, VG) Beauharnois, Quebec, Canada Dürnrohr, near Zwentendorf, Austria 2 x 500 MW 145 kv MW 145 kv 1983 Dürnrohr (Back-to-back) A.N.D.E. Acaray (Back-to-back) Manitoba Hydro (Winnipeg) Nelson River, Bipole 2 Paraguay 55 MW 25 kv 1981 Henday Converter Station near Nelson River Dorsey Converter Station near Winnipeg both in Maitoba, Canada 2000 MW 500 kv E T PS S 1 Page 3 of 3

31 VSC transmission projects executed by Siemens Customer & Project Name Location of Installation Rated Power DC Voltage Commercial Operation Rte and REE INELFE Baixas, France Santa Llogaia, Spain 2 x 1000 MW ± 320 kv DC 2014 Tennet SylWin1 Transpower Offshore GmbH BorWin2 Transpower Offshore GmbH HelWin1. Trans Bay Cable LLC Trans Bay Cable Project Tennet HelWin2 Büttel, Germany 864 MW ± 320 kv DC Diele, Germany 800 MW ± 300 kv DC Büttel, Germany 576 MW ± 250 kv DC Pittsburg - San Francisco 400 MW ± 200 kv DC 2010 Ca USA Büttel, Germany 690 MW ± 320 kv DC E T PS S 1 Page 1 of 1

32 HVDC PLUS Siemens AG April 2012 E T PS S 1 Energy Sector / Power Transmission Energy Solutions Sector

33 HVDC PLUS General Features of VSC Technology Additional Features and Benefits of HVDC PLUS Grid Access of weak AC Networks Independent Control of Active and Reactive power Supply of passive Networks and Black Start Capability High dynamic Performance Low Space Requirements Siemens AG April 2012 Energy Sector / Power Transmission Solutions 1

34 HVDC PLUS Features and Benefits of MMC Topology High Modularity in Hardware and Software No Generation of Harmonics Low Switching Frequency of Semiconductors Use of well-proven Standard Components Sinus shaped AC Voltage Waveforms Easy Scalability Reduced Number of Primary Components Low Rate of Rise of Currents even during Faults High Flexibility, economical from low to high Power Ratings No Filters required Low Converter Losses High Availability of State-ofthe-Art Components Use of standard AC Transformers Low Engineering Efforts, Power Range up to 1000 MW High Reliability, low Maintenance Requirements Robust System Siemens AG April 2012 Energy Sector / Power Transmission Solutions

35 HVDC PLUS From Model... Transformer Insertion Resistor Star Point Reactor AC Switchyard Converter Reactor Power Modules Siemens AG 20 4 April 2012 Energy Sector / Power Transmission Solutions

36 HVDC PLUS... to Reality Siemens AG 20 5 April 2012 Energy Sector / Power Transmission Solutions

37 Key Components of HVDC PLUS Symmetrical Configuration AC System A DC AC System B Controls, Protection, Monitoring To/ from other terminal 1. AC Switchyard 2. Transformers 3. Star Point Reactor 4. Insertion Resistor 5. Power Modules Converter Reactor Siemens AG April 2012 Energy Sector / Power Transmission Solutions

38 AC Switchyard (1) AC Switchyard: Connect the terminal to the AC system Siemens AG April 2012 Energy Sector / Power Transmission Solutions

39 Transformers (2) Conventional Transformers Converter Transformer: Obtain the AC voltage needed for the required DC voltage Optional 3rd winding for auxiliary system In feed Siemens AG April 2012 Energy Sector / Power Transmission Solutions

40 Star Point Reactor (3) Star Point Reactor: Symmetry of DC voltage Siemens AG April 2012 Energy Sector / Power Transmission Solutions

41 Insertion Resistor (4) Insertion Resistor: Charging of DC circuit decoupled from converter deblocking 10 April 2012 Energy Sector / Power Transmission Solutions

42 Power Module (5) Converter Hall - Example Power Modules: Modular Multilevel Conversion Siemens AG April 2012 Energy Sector / Power Transmission Solutions 1

43 Power Module (5) HVDC PLUS One Step ahead Compact Design Modular Design Lower Space Requirements Advanced VSC Technology Maintenance friendly Siemens AG April 2012 Energy Sector / Power Transmission Solutions

44 Power Module (5) Options for Converter Modules and Building Arrangements A highly flexible Design Siemens AG April 2012 Energy Sector / Power Transmission Solutions

45 Converter Reactors (6) ~ = = ~ = = ~ = = Parallel connection of three voltage sources 1 2 n 1 2 n Phase Unit Converter Reactor: Damp balancing currents between different phases Limit current gradients during severe faults Siemens AG April 2012 Energy Sector / Power Transmission Solutions

46 APPENDIX C TECHNICAL INFORMATION PRYSMIAN HVDC CABLES 1. Prysmian HVDC Cable Project Listing 2. Extruded Cables for HVDC Power Transmission

47 HVDC CABLE REFERENCE LIST Power Export and Domestic Markets Year Area Place of installation Customer 1962 Europe 1965 Europe France - U.K.(part of La Manche Channel crossing cable lenght) Italy & France (Italian mainland - Corsica - Sardinia islands link) Total length (km) N of cables Type of cable Working voltage (kv) Conductor size (mm²) EDF - France Paper insulated (solid) ±200 d.c. 1 x 340 ENEL - Rome Paper insulated (solid) 200 d.c. 1x Europe Spain (Mallorca - Minorca Islands link) GESA - Barcelona Self contain. oil filled 132 ac ± dc 1 x 500 Al 1974 North America Canada (Vancouver Island - Mainland - 2nd link through Strait of Georgia and Trincomali channel) B.C.H. & P.A. - Vancouver Self contain. oil filled ±300 d.c. 1 x Europe Crossing of English Channel CEGB - Guildford Paper insulated (solid) ±270 d.c. 1 x North America 1993 Far East 1996 Far East Deep Water Hawaiian Electric Co. 1.8 Self contain. oil filled ±300 d.c. 1 x 1600 Al Korea (Connection between Mainland and Cheju Island) Korea (Connection between Mainland and Cheju Island) KEPCO - Korea Paper insulated (solid) ± x 800 KEPCO - Korea Paper insulated (solid) ± x Europe Italy - Greece Enel Paper insulated (solid) 400 d.c. 1 x Europe Viking Prototype Statnett - - Paper insulated (solid) 500 d.c. 1x Oceania Australia - Tasmania (Basslink) N.G.C Paper insulated (solid) ±400 1 x North America New Jersey - Long Isand USA Neptune Regional Transmission System LLC Paper insulated (solid) x Europe Sardinia-Peninsula Italy (Pole 1) TERNA and EdF Paper insulated (solid) x 1150 Current Europe Sardinia-Peninsula Italy (Pole 2) TERNA and EdF Paper insulated (solid) x 1150 Current Europe Spain - Mallorca (COMETA) Red Electrica de Espagna (REE) Paper insulated (solid) ±250 1 x 750 Page 1 of 2 March 2011 rev 01

48 HVDC CABLE REFERENCE LIST Power Export and Domestic Markets Year Area Place of installation Customer 2009 North America Current Europe North Sea - BorWin2 (Submarine Cable) Current Europe North Sea - BorWin2 (Land Cable) Current Europe North Sea - HelWin1 (Submarine Cable) Current Europe North Sea - HelWin1 (Land Cable) Total length (km) N of cables Type of cable Working voltage (kv) Conductor size (mm²) San Francisco Trans Bay Cable LLC XLPE insulated DC ±200 1 x 1100 Transpower Offshore GmbH (now TenneT Offshore GmbH) Transpower Offshore GmbH (now TenneT Offshore GmbH) Transpower Offshore GmbH (now TenneT Offshore GmbH) Transpower Offshore GmbH (now TenneT Offshore GmbH) XLPE insulated DC ± XLPE insulated DC ± XLPE insulated DC ± XLPE insulated DC ±250 Current Europe North Sea - SylWin1 (Submarine Cable) TenneT Offshore GmbH XLPE insulated DC ±320 Current Europe North Sea - SylWin1 (Land Cable) TenneT Offshore GmbH XLPE insulated DC ±320 Current Europe France (Baixas) - Spain (Santa Llogaia) - Land Cable INELFE (INterconnection ELectrique France Espagne) Equivalent to 800MW Equivalent to 800MW Equivalent to 576MW Equivalent to 576MW Equivalent to 864MW Equivalent to 864MW XLPE insulated DC ±320 1 x 2500 Page 2 of 2 March 2011 rev 01

49 Extruded Cables for HVDC Power Transmission

50 HIGH VOLTAGE AND SUBMARINE System Solutions and Innovation HV land and submarine cable systems are the backbone of all power transmission networks. The greater and ever-increasing demand for power, the need for larger bulks of power and for the transmission of such bulks over longer and longer distances, the localization of the sufficient or even exceeding existing power generation capacity far from the requiring use and consumption centers are the main reasons for the realization of interconnections among power networks of various and different types. In addition, the involvement of new players other than the traditional operators and asset owners (e.g. Merchant Lines) in the electricity market requires an increasingly stricter control of the power flows. HVDC cable systems offer a technologically advanced and reliable instrument to address these issues. Power transmission cable systems AC transmission is used on short distances because it is more cost effective as it does not require converter stations. DC transmission is used for long lengths. For bulk power transmission, mass impregnated cables still prove to be the most suitable solution because of their capacity to work up to 600 kv DC. Recent developments on converters technology have lead to the adoption of extruded insulation cables for DC transmission systems up to 300 kv.

51 YOUR ENERGY... OUR SYSTEMS... ANYWHERE MONOPOLE CABLE i MONOPOLE (with metallic return) CABLE i + P i SEA RETURN + + P M.V. RETURN CABLE Cathode Anode Laid separated or bundled P/2 + - P/2 BIPOLE (with emergency electrodes) + HV 2. v - HV P/2 P/2 BIPOLE (with metallic return) + HV v 2. v v - HV P/2 P/2 BIPOLE (without metallic return) + HV - HV Typical HVDC transmission configurations > A new generation of cables for a new generation of converters In recent years HVDC power transmission systems have gone through a remarkable development because of the increasing need for the transmission of larger and larger bulks of power over longer and longer distances with the purpose of optimising the energy resources available worldwide. The new generation of converters (VSC Voltage Source Converters) use IGBT (Insulated Gate Bipolar Transistors) which allow the power to be transmitted as it is in both directions without requiring polarity reversal. This has allowed re-introducing the use of extruded cables in DC power transmission as, with the polarity reversal being no longer required, the problem of space charges that can arise with an extruded insulation and create excessive dielectric stress within the cable in the case of sudden polarity reversal does not exist any longer. Peculiarities of power transmission Transmission Solution Advantages Drawbacks/Limitations AC AC AC Simple No maintenance High Availability Heavy cable Length ( km) Rigid connection/power control Require compensation reactance AC DC Conventional AC Less cables (n.), lighter No limits in length Low cable and conversion losses Power flow control Very high transmission power Strong AC networks needed Cannot feed isolated loads Polarity reversal required Large space occupied Special equipment required (transformer, filters) AC DC New AC Can feed isolated loads (oil platforms, wind parks, small islands, etc.), medium power Modularity, short delivery time Small space and environmental impact No polarity reversal Standard equipment Higher conversion losses Reduced experience Limited power

52 HIGH VOLTAGE AND SUBMARINE About us Global Solutions Provider Prysmian is a world leader in the energy and telecommunication cables industry with a strong market position in higher added value market segments. It is organised in two business sectors: Energy Cables and Systems (submarine and underground cable systems for power transmission and distribution, cabling solutions for residential and infrastructure buildings and cabling systems for signalling, control and power feeding for a wide range of industrial applications) and Telecom Cables and Systems (optical fibres, optical cables and copper cables for voice, video and data transmission). The Prysmian Group has a global presence in 34 countries with 54 plants, 7 international R&D Centers and more than 12,000 employees. Specialising in the development of bespoke products and systems, Prysmian s main competitive strengths include: focus on research and development, ability to innovate in terms of both products and processes, and the use of advanced proprietary technologies. The energy market has been changing dramatically in recent years, as a result of deregulation and privatisation. To face the challenge of competition, energy transmission and distribution operators are driven towards an optimum use of their existing resources and new investments. To support its customers, Prysmian has evolved over the years from the traditional role of cable manufacturer to that of a Global Solutions Provider. Prysmian focuses on a total system approach, to give its customers the lowest cost of ownership of their new and installed cable networks. This Total System approach is, at all voltages, the ultimate solution to provide power utilities with real advantages in terms of asset optimisation. Besides an increasing activity on product innovation to lower investment costs, Prysmian is developing additional pre and post sales services for its customers - e.g. network services, enhanced logistics, engineering studies - to optimise asset management and give the best possible exploitation of transmission and distribution networks.

53 Product Range So far, Mass Impregnated cables (high-density paper tapes impregnated with a high-viscosity compound) have proven suitabl allowing these cables to be installed in HVDC links in very long lengths, up to several hundreds of kilometers. However, where remarkable advantages and makes for lighter and easier-to-handle cables, which can operate at high temperatures and at hig Thanks to recent technology improvement, extruded cables are presently adopted for voltages up to 300 kv DC. Recent studies have demonstrated that the extruded technology proves suitable for HVDC links, in particular when associated Impregnating fluids and/or pressure feeding reduced cable weight and dimensions and relative ease of jointing are the key fea in terms of total system costs. Power Transmission Capacity Performances of cables are very much related to environmental conditions. The graphs show typical rating curves in specified conditions. 200 kv HVDC 300 kv HVDC Submarine installation: Soil Thermal Resistivity 1.0 K.m/W - Soil Temperature 15 C - Burial Depth 1.2 m - Cables in contact (installation in bundle) Land installation: Soil Thermal Resistivity 1.2 K.m/W - Soil Temperature 20 C - Burial Depth 1.4 m - Axial distance between cables 300 mm

54 e for voltages of up 600 kv DC without requiring fluid pressure feeding, thus system requirements permit, the use of an extruded insulation offers several h electrical stresses. with VSC (Voltage Source Converter) technology. tures of this technological innovation, which offers also considerable benefits HDVC submarine cable design Prequalification of Extruded HVDC Cables Sea Trial for Submarine Cables Two electrical prequalification programmes were successfully carried out in accordance to the CIGRE TB 219 document "Recommendations for testing DC extruded cable systems for power transmission". The first for a rated voltage of 250 kv, the second for a rated voltage of 300 kv. Testing circuits included the cable and all relevant accessories. CIGRE Electra n. 171 recommends carrying out this test when laying conditions and/or cable designs differ considerably from previously established practice. The test is carried out on a sample of cable sufficiently long to reproduce the laying conditions and includes both a factory joint and a repair joint. The cable sample is laid at the maximum sea depth the cable will reach in real laying conditions and then recovered and subject to electrical tests and visual examination. The mechanical prequalification procedure according to CIGRE Electra n. 171 consists of: > Tensile bending test on a real cable sample (at least 30 m) containing at least one flexible joint, with three bending cycles at the same calculated load as during the installation around a drum with the same diameter (or smaller) of the laying ship pay-off wheel. The test is then followed and concluded by the electrical test and the visual inspection. > External water pressure withstand test carried out on a cable sample (visual examination).

55 YOUR ENERGY... OUR SYSTEMS... ANYWHERE Total Quality Commitment Standards and Recommendations The Prysmian brand has always been a guarantee for the supply of products and services based on worldwide common quality standards. Prysmian has a built-in multi-step quality assurance program, which covers the entire production process from cable design and raw material purchasing, to final inspection and testing documentation. Prysmian business locations and manufacturing sites as well as operation units are certified according to ISO 9001 and ISO Quality Management System standards for their specific activities and products, and environmental quality standards. Reference Project High Voltage and Submarine cable constructions are not fully covered by national or international standards; Prysmian products are designed to meet the projected service duty and to comply with the applicable specifications. Type approval references are given against each product type available. Most cable systems are custom designed to suit the specific environmental parameters and operating requirements of a particular route and loading conditions, taking into account the thermal, thermo-mechanical and electrical performance necessary to ensure reliable system operation throughout service life, which naturally will vary considerably between different applications and locations. Besides, international scientific bodies - like IEC and CIGRE - develop relevant standards, technical recommendations and guidelines within their activities in the field of High Voltage land and submarine cable systems. Prysmian relies on a long-standing tradition of participation and on a strong presence within such bodies, acquired thanks to its undisputed expertise developed over scores of projects accomplished anywhere in the world. Trans Bay Cable San Francisco, USA Route length: 85 km Transmitted power: 400 MW Voltage: ± 200 kv

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